Top Ten Tips when Buying Real Estate!
In today’s financial climate, real estate continues to be a strong investment in many areas. Educated buyers will always make the most out of the real estate market. These top ten tips to buying real estate will help you go into into your next real estate transaction with confidence.
TIP #1: Hire the right Agent!
Hiring the right Real Estate Agent is highly useful. If you are unfamiliar with the area, the realtor you choose is your link to important information regarding schools, zoning, city and county regulations, neighborhood trends, building and remodeling and rental restrictions, and character values. Every city has different laws governing what can and can’t be done with a character. Sanibel is one of the most beautiful cities in the United States due in part to its strict building codes and city planning. Having experienced many aspects of real estate transactions on a personal level, I understand situations and concerns of my buyers and sellers. I have been an island character owner for many years and have walked by several local real estate transactions myself. From buying and selling lots to building new homes with local builders, to investing in rental income producing similarities and employing 1031 Tax free exchanges, I don’t just sell island real estate; I invest in it because I believe there is no place in the world like Sanibel and Captiva. Whether you work with me or someone else, finding the right realtor is highly useful.
TIP #2: Utilize 1031 Tax Exchanges and Save Money!
1031 Tax Exchanges are tax free exchanges of investment character. Section 1031 of the Internal Revenue Code is one of the last great tax shelters. If you buy an investment character of “like kind” within 180 days of the sale of a similar kind character, and you are willing to increase the amount of debt or value of the character, your capital gains taxes can be completely deferred. Having just completed a Reverse 1031 tax exchange myself, I believe in using this powerful tax shelter. Feel free to contact me if you are considering using a current Sanibel, Captiva, or Ft. Myers character in a 1031 Tax Exchange, or want to buy an investment character that might qualify in the future for a 1031 Tax Exchange. A Reverse 1031 Tax Exchange is the same exchange concept as a 1031 Tax Exchange except you have purchased your substitute “like kind” investment character first, before selling the character to be exchanged. Learn more about 1031 Tax Exchanges, and how to use them to your financial advantage. Keep in mind that a neutral party must have act a Qualified Intermediary. Real Estate may also be bought and sold by your self directed retirement account. Whether you utilize a traditional IRA, Roth IRA, SEP, or company plans such as 401 (k) plans, Keogh, or profit sharing plans, probe your options.
TIP #3: Pre-qualify for Financing!
Pre-qualifying for a loan may not seem that important until you find your perfect paradise character at the same time as another buyer. When a character is priced to sell, it will usually attract more than one buyer. Once a seller receives an offer, the two most important things they consider are …the price, and the contingencies. For some sellers, a contract contingent on the buyer obtaining financing makes them uncomfortable with the offer. Eliminate any doubt in the mind of a seller, by pre-qualifying for the amount you may use on the buy of any character. This is especially important if your dream character suddenly has a price reduction. When this occurs other buyers might come into the picture, that didn’t look at that character before it went “On Sale”! Often times a seller will take a financially substantial contract over a higher offer. Be ready to put a deal together!
TIP #4: Location, Location, Location!
“Location, location, location”, while overused as a real estate phrase, is nevertheless and always should be a huge consideration to you as the buyer! If something about the location of a character bothers you, be aware that the same location drawback will bother any buyer you hope to attract when and if you need to resell the character! It’s important to ask a lot of questions, but often times it is difficult to know the right questions to ask if you are unfamiliar with the community. This is why it is so valuable to choose and hire the right real estate agent to represent your interests when buying a character.
TIP #5: Get a Home Inspection!
Obtaining an inspection report performed by a licensed specialized building inspector of your choice, can protect you from many defects that are hidden from view. Why gamble with such a large financial investment? Let a specialized building inspector point out areas to be fixed or replaced that aren’t obvious. A good inspector will give you a lengthy report covering all systems in the home from electrical, to plumbing, to roof conditions, and structural concerns. Once you receive a report you may begin negotiations again concerning repairs. Often a seller will agree to make necessary repairs up to a stated financial amount. When a seller lists their character “as is” they are letting you know that they are not willing to fix or replace any part of the character. If you are interested in an “as is” character and aren’t going to level the structure and build new, it is nevertheless in your best interest to acquire an inspection report. Don’t rely on the building inspector to look for termites and other unhealthy pest problems. Although an inspector will see pest damage, it is best to have a separate termite inspection conducted by a licensed company that understands pests and can eliminate them.
TIP #6: acquire a Survey and Title Insurance!
Surveys will show easements, encroachments, and border lines of a character. By surveying a home in an established neighborhood you are assured that the character border lines have been maintained. As homeowners add on the their similarities over time with fences, sheds, docks, garages, and other structures, border lines can be crossed placing part of their structure on your character, or vice versa. Surveying vacant land is also important for same reasons as a home, plus a survey will help determine the size home, or amount of coverage the lot will allow.
Title Insurance will protect your investment from another party claiming ownership interest in your character. Title searches will uncover liens placed on a character by vendors, or mistakes in past transfers of the title. The last thing you want to discover when you’re in the back stretch of a transaction is that there are encumbrances on the character such as tax liens, undisclosed owners, easements, or leases. Should a claim arise after the buy of a character, the title insurance company is there to protect your ownership interest in that character.
TIP #7: Be Realistic!
“Wants” and “Needs” are very different when is comes to real estate features. If every home you see has the upgrades you “want” but exceeds the price range that you “need”…. be realistic. Who wouldn’t love a large, oceanfront, professionally decorated home or condominium, with all the bells and whistles? Looking at similarities that go beyond your price range is always fun, but it can be extremely frustrating and upsetting. Be realistic by looking at listings in the price range you “need”, keeping an eye out for that special character that has the possible to evolve into the dream home you “want”. Always look beyond the furnishings, wallpaper, and floor coverings to the architecture of the home; it is then that you will find similarities with possible.
TIP #8: Use Contract Contingencies Wisely!
Contingencies in a contract for the buy of a character are designed to protect you, the buyer! This may seem silly to mention but it’s important to remember that you need to work with the seller to come to an agreed upon contract. Valid contingencies to an offer are expected by the seller. shared contingencies include building inspections, termite and pest inspections, financing, and surveys. Many deals fall apart over small details, and easy to fix issues. Remember that sellers are emotional about their character. If you can see that major repairs or replacements need to be made due to neglect or age, make allowances for this in your offering price. The old adage “Everything is negotiable” nevertheless holds true, unless you upset the seller so much that they refuse to work with you. Try to avoid listing cosmetic changes you would like the seller to make as contingencies. Cosmetic changes are subjective, be objective when writing a contract.
TIP #9: Understand Regional Health and Safety Issues!
An informed realtor will help you understand other health and safety issues that should be considered when purchasing a character. Safety and Health topics can include EIFS (Synthetic Stucco), indoor air quality, mold, radon, and rule paint. Many of these require the seller to sign a disclosure statement, while others may not apply due to the age, kind of construction, or location of the character being purchased.
TIP #10: Ask for Information!
Don’t be shy. When you have hired a realtor to work for you, ask them for information. Do you want to look at all the similarities in your price range, with the features you need, or just the houses a realtor wants you to see? You deserve all the information you need to make an educated decision. Can you imagine buying the home that you felt was good for your family, only to find that you never received information on a similar character that is perfect for all your needs? I provide many sets to insure my buyers always have information at their fingertips.